But Mr Howard said the problem had arisen because of overly-generous negligence laws, which the federal government had no jurisdiction over.

"The state governments control the medical negligence laws of this country, we don't," he told radio 3AW.

"We have no constitutional power to alter the negligence laws of Australia."

Mr Howard said the federal government had become involved in the issue because it had been forced to bail out the now defunct insurer United Medical Protection.

"We are picking up a large amount of the bill even though the cause of the problem is firstly the poor administration of that medical defence organisation and secondly, the fact that the states of Australia over long years allowed the medical laws to become more generous."